In the trade war with the U.S., China has clearly shown that it is willing to reject Pacific trade partners based on political over economic considerations. Beijing’s wider policy to develop industrial and agroindustrial capacity in Central Asia, the Caucasus and the Middle East means that these economies can use short-term structural changes in global trade dynamics to their longer term advantage. Ultimately, all states suffer in a trade war. If Central Asian, U.S. and European producers all had open access to China’s markets, all sides would benefit in the long run. In the short term though, a U.S.-China trade war is a huge opportunity for Central Asian economies to soak up China’s heavy industry outward direct investment despite the risk of a China policy bank debt-trap.

After a decade of cold relations, Azerbaijan and Iran are eager to warm up to each other, as both nations are hungry for foreign investments and boosted regional trade. As world oil prices hit low levels, Azerbaijan and Iran are looking for ways to develop their non-oil economy, integrate regional transport networks and boost mutually advantageous business projects. In that respect, thorny political issues that have dominated the bilateral relations appear to have been put on the backburner. President Ilham Aliyev’s upcoming visit to Iran will aim at lifting Azerbaijani-Iranian relations to a new high.

Turkish-Russian relations have not recovered after the downing of a Russian jet last November. On the contrary, the tension is spreading into neighboring areas. Russia is pressuring the Central Asian countries, politically and economically, to constrain Turkey’s activities in the region. Although Ankara’s influence in the Central Asian Republics is limited, it developed good ties with almost all them after the collapse of the USSR. Turkey was the first country to recognize the new-born states; it has supported their independence and contributed to their integration into the international system. Under the AKP’s rule, Turkey has also become a major donor for some of them. Central Asian countries now seek risk being dragged into the Turkish-Russian standoff.

A number of initiatives have combined to make the development of continental transport and trade across the heartland of Eurasia a reality rather than a mere vision. Some of these have been external, while many have been internal to the region. Yet Europe, which launched the visionary TRACECA program in the early 1990s, is largely absent from the scene today. Yet if Europe works with Central Asian states, it stands to benefit greatly from this process. This would involve work to make the transport corridors more attuned to market logic; to promote the development of soft infrastructure; to pay attention to the geopolitics of transport and support the Caucasus and Caspian corridor; and not least, to look ahead to the potential of linking Europe through Central Asia not just to China, but also to the Indian subcontinent.

In early October, Russia's Minister of Defense Sergei Shoigu announced that Russian navy warships based in the Caspian Sea had fired a total of 26 missiles at the positions of the terrorist organization calling itself the Islamic State (ISIS) in Syria. The minister claimed that all the 11 targets, located around 1,500 kilometers from the warships, were destroyed over two days. Russian authorities and pro-regime media have considered the strikes a big success. While information soon resurfaced that some cruise missiles had landed on Iranian soil, the fact that the October strike is definite proof of the failed attempts to turn the landlocked water basin into a demilitarized zone has received less attention.

The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.